Chinese steel maker Shougang starts venture project in Malaysia

KEMAMAN, Malaysia, Dec. 5 (Xinhua) -- In a move to dominate Southeast Asia's steel industry, China's state-owned steel maker Shougang Group launched a project on Monday to build a 1.8 billion ringgit (574.25 million U.S. dollars) integrated steel mill in Malaysia through a joint venture with local steel maker Hiap Teck Venture Berhad.

The steel slab plant would be built on a 1,200-acre land in Kemaman, an industrial city in the country's East Coast economic development region that has moderate iron ore reserves.

The project, called Eastern Steel, is the largest Chinese foreign direct investment to date in Malaysia.

The steel plant is estimated to produce 1.5 million tonnes of steel slabs annually, though Eastern Steel was given a license to make five million tonnes of steel products per year.

Shougang, ranked 325 in global Fortune 500, holds 40 percent of the Eastern Steel project while Hiap Teck controls 55 percent of the stakes.

"Chinese steel industry is suffering from overcapacity and that is why we venture abroad," Hu Bin, the president of Shougang Group, told the press before the plant's groundbreaking ceremony on Monday.

"The ASEAN (Association of Southeast Asian Nations) is a huge and developing market. I think the bloc has great potentials and we are tapping into it via Malaysia," Hu said.